Correlation Between BMO Aggregate and TD Revenu

Can any of the company-specific risk be diversified away by investing in both BMO Aggregate and TD Revenu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BMO Aggregate and TD Revenu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BMO Aggregate Bond and TD Revenu mensuel, you can compare the effects of market volatilities on BMO Aggregate and TD Revenu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BMO Aggregate with a short position of TD Revenu. Check out your portfolio center. Please also check ongoing floating volatility patterns of BMO Aggregate and TD Revenu.

Diversification Opportunities for BMO Aggregate and TD Revenu

-0.55

Correlation Coefficient

BMO Aggregate  TD Revenu

Excellent diversification

The 3 months correlation between BMO and 0P000071LQ is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding BMO Aggregate Bond and TD Revenu mensuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TD Revenu mensuel and BMO Aggregate is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BMO Aggregate Bond are associated (or correlated) with TD Revenu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TD Revenu mensuel has no effect on the direction of BMO Aggregate i.e., BMO Aggregate and TD Revenu go up and down completely randomly.

Pair Corralation between BMO Aggregate and TD Revenu

Assuming the 90 days trading horizon BMO Aggregate is expected to generate 10.38 times less return on investment than TD Revenu. But when comparing it to its historical volatility, BMO Aggregate Bond is 1.22 times less risky than TD Revenu. It trades about 0.01 of its potential returns per unit of risk. TD Revenu mensuel is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,199  in TD Revenu mensuel on September 14, 2024 and sell it today you would earn a total of  377.00  from holding TD Revenu mensuel or generate 17.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.75%
Values	Daily Returns

BMO Aggregate Bond  vs.  TD Revenu mensuel

BMO Aggregate Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BMO Aggregate Bond has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BMO Aggregate is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

TD Revenu mensuel

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TD Revenu mensuel are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, TD Revenu is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BMO Aggregate and TD Revenu

The main advantage of trading using opposite BMO Aggregate and TD Revenu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BMO Aggregate position performs unexpectedly, TD Revenu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TD Revenu will offset losses from the drop in TD Revenu's long position.

The idea behind BMO Aggregate Bond and TD Revenu mensuel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.